The Nasdaq found itself in deep waters on Tuesday as steep declines in mega cap shares pushed the index as much as 3% lower.
Bouncing off intraday lows, the index managed to close 1.88% down for the day. However, the negative sentiment has carried over to ASX 200 tech shares today.
Why ASX 200 tech shares are coming under pressure
High profile United States tech companies including Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) all fell between 1.3% to 3.5%.
Another US-listed tech stock to note is Affirm Holdings Inc (NASDAQ: AFRM) which dived 6.9% lower. The Affirm share price has shed 16% in value in this week alone to set a new all-time record low.
Conversely, cyclical and defensive sectors such as banks, consumer staples, and real estate outperformed and finished near positive territory, helping the Dow Jones Industrial Average Index (DJX: .DJI) to close 0.06% higher.
At the time of writing, the Afterpay share price is trading 2.88% lower at $107.38. Zip shares are also down 2.74%, trading at $7.45. Meanwhile, the Sezzle share price has fallen a painful 4.33% to $8.61.
Why are tech shares selling off?
Today’s selloff arguably continues to reinforce the recent rotation out of tech-related sectors, and back into cyclical sectors and value shares. Many stocks that outperformed during the pandemic are suddenly on the back foot as the real economy continues to recover.
Why it’s not all doom and gloom
Despite the weakness in tech, the ASX 200 is heavily weighted towards financials. The US financials sector managed to close 0.7% higher while other notable sectors such as materials and industrials closed a respective 1.04% and 0.41% higher. At the time of writing, three of the big four ASX 200 banks are trading in the green.
If the ASX 200 were to follow in the footsteps of the US market today, the selling pressure could continue to be concentrated in tech and growth-related sectors.